Alaska Airlines’ parent company is buying Virgin America for $2.6 billion, the airlines announced Monday. The deal, worth about $4 billion including debt and aircraft leases, would create the fifth-largest airline in America.
News of the deal is being met with skepticism by some of Virgin’s die-hard fans. While small, the airline is praised for its dedication to customer service. Independent researchers have named Virgin the highest-quality airline in America for four years running. For Virgin loyalists, anything that might muck that up is something to fret over.
Even Richard Branson, who helped create the airline but cannot legally control it under U.S. Law, wrote a mournful letter over the deal.
Neither Virgin’s fans nor Branson need worry. Here are four reasons why.
Alaska has adoring fans, too. It’s rare to hear people express any kind of positive emotion about an airline. But in reporting my Nov. 2015 story about Alaska Airlines, I found that many of the Seattle-based company’s passengers really do love flying on it. To that end, Alaska has topped J.D. Power’s Airline Satisfaction Survey for eight years running.
Here’s an excerpt from that story:
Alaska traces its roots to 1932, when a fur trader named Linus McGee started flying passengers alongside his wares. Today, Alaska is an oddity in the airline business. It’s not a global mega-carrier like American or United. Nor is it an ultra-low-cost carrier like Spirit, which makes money by offering only the most basic service and charging passengers for every upgrade it can put a price tag on. Think of Alaska as the largest regional carrier around, with an ever expanding list of destinations.
Another oddity: Alaska’s customers actually like flying it. It was the first major carrier to sell tickets over the Internet, it regularly wins an annual airline customer-service award coveted by competitors, and it is buying special planes with nearly 50% more overhead bag space. (Bring on those Rollaboards!) In 2014, when U.S. Carriers posted their worst on-time performance in years, Alaska had the second best numbers in the industry. Only Hawaiian Airlines, which benefits from terrific weather at its prime airports, did better.
It’s innovative. Virgin does a lot of flying to and from California, where it’s gained a following among the tech-savvy Silicon Valley crowd. The techies should be happy to note that Alaska has a long history of innovation. It was the first major airline to offer online ticketing and to put tablets in the cockpit, for example. Today it’s experimenting with biometric access for its frequent flyer lounges and GPS-based landing approaches that promise to be more time and energy efficient.
It’s on time. Alaska has been named the most punctual airline in America five years in a row by FlightStats — more than 85% of its flights arrived no later than 15 minutes behind schedule in 2015, that firm said. That’s an easier feat for a smaller airline like Alaska because it has a less complex network to manage, but it’s still impressive.
You’ll get to keep your miles. Virgin’s frequent flyer program will remain separate until the deal closes, a process that could take the rest of the year. Alaska says it will then honor any unused Virgin miles. Exactly how the airline will do that remains to be seen. But Virgin customers could actually win big here. Alaska’s bigger route network means more ways to spend those hard-earned miles.
That said, any airline merger brings uncertainties. American and United are still plagued with problems after their tie-ups with US Airways and Continental. The Virgin deal will add Airbus aircraft to Alaska’s all-Boeing fleet, removing the keep-it-simple advantage of flying a single aircraft type. And it seems unlikely that Alaska will maintain some of the unusual characteristics of the Virgin brand, like the funky onboard mood lighting. But if Virgin was going to be sold, it’s hard to see it in better hands than Alaska’s.
